On February 15, 2008, the United States Court of Appeals for
the Federal Circuit issued an en banc Order stating
that the full Court will rehear the appeal of In Re Bernard
L. Bilski and Rand A. Warsaw. In U.S. Court of Appeals
practice, an en banc rehearing is typically granted
only where a case is considered unusually important. Here, the
patent application at issue claims a "method for managing
the consumption risk costs of a commodity." In rejecting
the application, the United States Patent and Trademark Office
had objected to issuing a patent for the method on the ground
(among others) that it was not restricted to performance by
machines and/or did not contain any limitation to prevent it
from covering a purely mental process by individuals.
The U.S. Court of Appeals for the Federal Circuit has
expressly raised the possibility of overruling its own prior
decisions on business-method patents from two cases: State
Street Bank & Trust Co. v. Signature Financial Group
Inc., 149 F.3d 1368 (Fed. Cir. 1998) and AT&T
Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed.
Oral argument will be heard in May 2008. The decisions under
reconsideration have been used to support the U.S. patent law
doctrine that transformation of data by a machine, business
methods and software are all patentable subject matter. These
decisions have remained controversial, especially in light of
the relative ease of obtaining software patents in the U.S. as
compared to other jurisdictions, and (it is often argued) the
frequent issuance of U.S. patents for non-innovative ways to
implement known methods using computers.
Prior to the 1998 decision in State Street,
business methods were not considered to be patentable subject
matter by the USPTO. State Street did away with the
so-called "business method exception" to patentable
subject matter, and held that business methods could be
patentable if they could be applied to produce "a useful,
concrete and tangible result" - that is, accomplish a
practical application. The business method at issue in
State Street was for a computer-based system of
pooling mutual funds.
State Street opened the floodgates to
business-method patent applications in the United States,
resulting in a seven-fold increase in such patent application
filings from 1998 to 2006. Numerous patents have been granted
for business methods, many for internet-based methods ranging
from Amazon.com's "one-click" on-line
ordering process to Priceline.com's on-line reverse
auction for airline tickets. As a result, the Federal
Circuit's en banc decision in In Re
Bilski could affect the validity of scores of patents
issued since State Street.
Although the Federal Circuit's decision will almost
certainly have a significant impact on United States patent
law, it is also likely to have important ramifications for
patent law in Canada. The approach in Canada to business-method
patents is more conservative than that in the United States, so
a reining-in of the scope of patentable business methods in the
U.S. may help to clarify and solidify Canada's
position. Ultimately, the decision may overturn a landmark case
and carve out a new approach to business-method patents - the
implications of which remain to be seen.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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The Federal Court dismissed a motion by Apotex seeking particulars from Allergan's pleading relating to the prior art, inventive concept, promised utility and sound prediction of utility of the patents at issue.
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